Your grand opening is still weeks away, and you’ve no doubt already invested considerable time and money in your new business venture. By now, you may have purchased a building (or rented space in one), acquired equipment and/or inventory and hired staff. The doors aren’t even open yet, and already you have a lot to lose. Now is the time to protect these assets so, if the worst does happen, your business can carry on.
Insurance to protect the property — cash, equipment, furnishings, tools and machinery — that is acquired for use in operating your business and is not for sale to customers includes the following types:
Liability Protects a business from loss as a result of injuries, deaths or property damage caused by a business’s operations, employees or products. Three types:
• Premises and Operations coverage pays when a business is legally responsible for an injury claim, if, for example, someone slips and falls on company property.
• Products and Completed Operations coverage, commonly called “product liability,” helps pay for monetary losses that result from injury or damage caused by a company’s product. One type of liability coverage required in Florida is commercial automobile insurance to cover vehicles owned by the company or personal vehicles operated by the company’s employees while on the job.
• Errors and Omissions coverage, also known as “professional liability,” protects your business against malpractice, errors and negligence in provision of services to customers.
Property Protects the value of physical assets. “Replacement cost” coverage pays to replace or rebuild buildings and other property, as long as the property is insured for replacement value.
Windstorm Type of construction, size of structure, proximity to water and location determine the cost and availability of windstorm insurance through private insurers or through Citizens Property Insurance Corp., the state-created insurance provider.
Flood Property insurance does not cover damage from floodwaters, whether from rivers, lakes or oceans. Through the federal government’s National Flood Insurance Program (NFIP), a small business’s building and contents each can be insured for up to $500,000.
Business Interruption Pays ongoing expenses such as rent, utilities and some or all payroll expenses when a business must close because of an insured property loss. “Extra expense insurance” reimburses for special expenses and helps a business minimize losses by getting up and running quickly. For example, if a business can restart operations in a week, rather than a month, by paying a surcharge to ship replacement equipment by air express, the extra expense insurance covers the air express charge. Because most business interruptions occur in the first 30 days after a disaster, be sure to purchase a policy that kicks in within a few days of the event.
Commercial Crime Covers losses caused by employee dishonesty; forgery or alteration; theft, disappearance and destruction; robbery and safe burglary; premises burglary; computer fraud; extortion; and premises theft and robbery.
Cybersecurity: Protecting Your Digital Fingerprints
If you think your business is too small to attract a cybercriminal or that you don’t have anything worth stealing, you are wrong. Small businesses have valuable information in their databases and, unlike large corporations, often no preventive measures in place to repel cyberattacks. Potential threats may come in the form of:
Website Tampering Defacing your website, hacking your system and compromising webpages to allow invisible code that may download spyware onto your device.
Data Theft Stealing your computer files and hardware or peripherals (CDs, flash drives, etc.); intercepting your emails.
Denial-of-Service Attacks Locking the computer and/or crashing your system with the ultimate goal of preventing you from conducting business with your internet-connected systems.
Malicious Code and Viruses Sent over the internet for the purpose of finding your files and deleting critical data or locking your computer/system; includes ransomware that restricts access to the infected computer/system and demands a ransom payment for removal of the restriction.
Intellectual Property: Protecting Your Ideas
Your company’s intangible assets – its reputation, name recognition, know-how and/or creative ideas – have no physical existence, yet they have commercial value and should be protected in one of three ways:
Patents A patent is a property right granted by the U.S. government to an inventor to exclude others from making, using or selling the invention without permission. “Utility patents,” for new inventions or functional improvements of existing inventions, remain in effect for 20 years; “design patents” are effective for 14 years.
Following public disclosure of an invention, the inventor has a year to file for a patent with the U.S. Patent and Trademark Office (www.uspto.gov). You can apply for a patent online yourself; however, USPTO recommends seeking specialized legal help due to the complexities of filing.
Trademarks Broadly speaking, trademarks are words, symbols, names, internet domain names, packaging and labeling that distinguish one business’s product from another’s. Trademarks may be registered through the U.S. Patent and Trademark Office or, for more limited state protection, through the Florida Department of State, Division of Corporations. Although registration provides greater protection, trademarks that are not registered still legally protect owners.
Copyrights Original writing, musical works, artistic designs and other works of expression are protected under federal copyright law, which gives the author exclusive rights to use the works. Copyright lasts 70 years after the author’s death.
An author’s copyright is automatic when a work is created; for extra protection, however, simply add the word “copyright” or the symbol ©, the first year of publication and name of the copyright owner at the top of the page. To officially register a copyright (necessary if you wish to bring a lawsuit for infringement), visit www.copyright.gov.
Could your business operate without someone at the helm? Probably not. The following insurance types are available to cover losses involving bosses and/or employees:
Directors and Officers Liability Protects both the company and individual executives in the event that employees, shareholders, government agencies and others sue directors and officers over financial losses due to alleged company mismanagement.
Key Employee Protects a business in the event of the death of an individual considered vital to the firm’s success. The company buys and pays for a key-employee policy – similar to a life insurance policy – on a specific individual, and the death benefit goes to the company rather than to the individual’s family.
Workers’ Compensation Florida law requires employers with four or more full- or part-time employees to have workers’ compensation coverage for their employees. Sole proprietors and partners are not considered employees. Unless exempt, corporate officers are included in the definition of “employee.” (Employers in construction and agriculture are subject to different requirements.)
Confused about which individual insurance policies to buy? Consider a “business owner’s policy” (BOP) that combines property, general liability and business interruption insurance coverage in a single package. BOPs are typically available only to businesses with fewer than 100 employees and you may still need additional coverage for unique risks related to your specific situation.
For more handy tips on buying business insurance, visit www.sba.gov/content/buying insurance.